Best Banks September 2024: Save More, Earn More and Meet Your Money Goals

What To Consider When Choosing the Best Bank

When choosing a bank, there are several factors you should look for — including the products and services it offers, its fees and interest rates and, if it’s a brick-and-mortar institution, whether there are physical branches near you. The best bank for you will also depend upon the type of account you wish to open. You can also open different accounts at different banks to take advantage of the best rates and offers for specific accounts.

Different Types of Banks

In this day and age, there are more banking options than ever before, each offering different services and levels of accessibility that are tailored toward individuals as well as businesses. Every bank operates independently with its own terms, rates and range of options for customers. However, there are many types of banks and standard services that most will provide to help clients manage their money. Here are some of the main types available:

• National banks: The big banks that have a national presence and thousands of physical locations with recognizable names, like Chase, Wells Fargo and Bank of America, among others.
• Online banks: Did you know that over one in four people do their banking online, which is about 27%? Unlike national banks that have plenty of brick-and-mortar locations, online banks work primarily in the digital space, including website portals and mobile apps.
• Retail banks: Financial institutions that cater to retail consumers, aka regular people, rather than corporations and large businesses. They offer personal banking options, like checking and savings accounts, as well as loans.
• Neobanks: Nontraditional banking options that are virtual and rely on fintech solutions to provide money management without in-person customer support. They generally partner with more established institutions to provide services.
• Private banks: A concierge-style service providing personalized counseling for wealth management and estate planning, private banks are usually reserved for high net worth individuals.

Standard Bank Services

• Savings accounts: A low interest earning account that allows you to make regular deposits to help build up a financial reserve. Generally, these accounts are used to store money you don’t need to access regularly and want to allow to grow.
• Checking accounts: A type of bank account for active money transactions. Customers can deposit money either through paper checks or direct deposits and are able to use funds 24/7, including paying bills or making retail purchases, which are generally done with a linked debit card. Many banks allow you to link savings accounts to checking accounts for easy money transfers and protection from overdraft fees if your checking account runs low.
• CDs: A certificate of deposit is a more specific type of savings product where you make a one-time deposit and determine a term that allows the money to vest, typically from three months to five years. Generally, you are not able to access the money and will incur a penalty for an early withdrawal. The tradeoff is that a CD offers a higher interest rate and more earning potential.
• Money market account: This type of account combines the earning potential of a savings account with the convenience of a checking account in which the customer can write checks or use a linked debit card for purchases.
• Loans: Banks can provide loans for large purchases with varying interest that will accrue over the course of the agreement. Whether it’s a 30-year mortgage or a five-year auto loan, there’s a large range of options. Banks may also be able to help finance student loans and business loans and help process home equity loans and lines of credit.
• Credit cards: In addition to loans, many banks offer personal credit cards with a revolving line of credit available for purchases that can be paid off over time. Bank-issued credit cards can also come with perks such as cash-back promotions, accruing travel miles and reward points, but it’s important to read the fine print when it comes to APRs and any annual fees.
• Retirement accounts: Some banks also offer personal retirement plans, such as 401(k) plans, that can be helpful for those unable to contribute to an employer-matching retirement savings account — for example, if the person is unemployed or a contract/freelance/side gig worker.

How Your Money Is Protected in a Bank

National banks are insured by the Federal Deposit Insurance Corporation (FDIC), which protects up to $250,000 per person per institution. So for any event that may affect a financial institution’s health or viability, whether a natural disaster or default, a customer’s money is insured through this federally regulated mandate.

How To Choose the Best Bank

Finding the right bank for you is an important step in getting control of your cash flow and reaching your financial goals. A GOBankingRates survey found that 60% of the respondents keep $500 or less in checking and 49% keep $500 or less in savings. So it’s a good idea to familiarize yourself with what banks near you are offering and what best suits your needs so you can grow your wealth.

Banking Terms To Know

Here is a glossary of terms commonly used in banking.

• Account balance: Total funds in your account.
• Adjustable rate: Typically a mortgage rate or rate of interest that can vary during the term of the loan.
• Annual percentage rate: APR is the interest rate and fees you’re charged per year for a loan or credit card.
• Annual percentage yield: APY is the annual rate of return on a savings, checking, CD or money market account.
• Automated clearing house: ACH is the electronic network used to transfer money between accounts at different banks or financial institutions.
• Available balance: The amount from the balance in your account ready for immediate withdrawal.
• Beneficiary: An individual, institution, trustee or estate that will receive money or other benefits upon the death of a certain person.
• Certificate of deposit: Also known as a CD, this is a savings product used to lock in a fixed APY on deposits for a set period of time until the maturity date.
• Checking account: The day-to-day account that allows easy access to your money for withdrawals, checks or online transactions.
• Credit score: Number, or score, indicating an individual’s creditworthiness. This is based on factors such as your total debt, number of open accounts and whether you rent or own your home. The better your credit score, the easier it will be to secure things like loans through banks.
• Debit: A transactional decrease in a bank account, such as a withdrawal or writing a check.
• Debit card: An ATM card linked to your account that allows you to buy things in stores or pay for things online and have the funds directly withdrawn from your checking account.
• Deposit: Any funds you put into your account.
• Direct deposit: Any regular or scheduled automatic deposit to your account made by your employer or other outside agency.
• Early withdrawal penalty: Fees you incur for withdrawing funds from an account before its maturity date.
• eBills: Paperless electronic bills that are sent directly online for payment instead of being mailed to your home.
• Electronic funds transfer: EFT is money sent or transferred between accounts through ATMs or electronic payment systems.
• Federal Deposit Insurance Corp: The FDIC is an independent U.S. government agency that insures and protects bank accounts and deposits of up to $250,000.
• Fixed rate: An interest rate that does not vary for the entire term of the loan or deposit.
• Home equity loan: A loan that uses the equity of your home as collateral.
• Indexed rate: The rate charged for an adjustable rate loan for things such as a mortgage or credit card payment.
• Interest: This can be either the cost of borrowing money or the amount earned on a deposit account.
• Interest income: The amount of money you earn on savings accounts, CDs and money markets. This is considered taxable income.
• Interest rate: Either the interest charged on loans or the annual percentage paid on an interest-bearing savings account or CD.
• Joint account: A bank account that has more than one person’s name on it, thus giving equal ownership to each account holder.
• Maturity: The date the CD funds are available for withdrawal or renewal with interest paid. This can also refer to the date a full balance is due on a loan.
• Minimum balance: This is the amount your average account balance must stay above to avoid fees.
• Money market account: A high-yield savings account that allows you to still have regular access to your funds.
• Mortgage loan: A loan used to purchase or refinance a home, real property or another real estate property, with payments usually spread over 10 to 30 years.
• Overdraft protection: An arrangement that typically comes with a minimum balance requirement made between you and your bank that allows you to withdraw more than the balance in your account without incurring any penalties.
• Periodic rate: The cost of credit interest rate over a specific period of time, such as per day or per month.
• Personal identification number: A PIN is a private number issued with your debit or credit card so you can withdraw money from ATMs.
• Routing number: The first nine numbers that appear at the bottom of a check to identify the financial institution responsible for holding the account. These numbers can also be found in your bank’s mobile app or online account.
• Savings account: An interest-bearing deposit account used for storing money.
• Service charge: A charge or fee for a service or a penalty for not meeting certain requirements, such as insufficient funds, not meeting minimum balance requirements or surplus transactions.
• Surcharge: This is typically the fee you are charged when you use out-of-network ATMs.
• Term: The time to the maturity of a loan or deposit.
• Variable rate: An interest rate that fluctuates for things such as lines of credit, during the term of a loan, or on a deposit account.
• Wire transfer: An electronic payment service for transferring funds by wire to use during the same business day.

Bank Fees

Did you know that many Americans spent over $150 in bank fees–including overdrafts–a year? According to GOBankingRates, that’s around $35 a transaction. That might be something to think about when you’re thinking about where to bank.

All banks operate differently, but many have fees that may be applied for maintaining accounts unless you meet certain requirements. For example, a savings account may require that you keep a minimum amount deposited at all times to avoid a fee, and a checking account may dictate that you must have regular direct deposits made in order to not be charged.

Many banks also apply overdraft fees, charging customers any time they overdraw a checking account where the available balance can’t cover the purchase being made.

Bank Interest Rates

You might be one of the millennials–or any age group for that matter–that opts for high-yield savings accounts versus other ways to save, like investing. You might want to think about any of the banks on this list and the interest rates being offered.

Savings accounts and certificates of deposit opened with a bank will both accrue interest, though the amount will change based on the financial institution and the current average as dictated by the Federal Reserve. Savings accounts will typically have a lower interest rate than a CD, but it’s best to shop around to find the most competitive offer.

ATMs and Online Banking Services

It used to be that you had to wait until a local branch of a bank was open to withdraw money or deposit checks. But with advanced technology, there are more convenient options nowadays. All major banks have ATMs that allow you to do most of your banking business at any time of the day without needing a teller to be present.

Online banking portals and mobile apps also offer the same 24/7 banking opportunities where you can check balances, transfer funds, pay bills and deposit checks by taking a photo with your smartphone.

How To Open a Bank Account

Once you’ve determined which financial institution you want to do your banking with, you’ll need a few items in order to open an account. That list includes:

• Government-issued ID
• Social Security number
• Initial deposit to fund the account

Most of the time, you can open new accounts either in-person or online. Once established, you may also need to change your paycheck direct deposit and update any of your linked automatic bill pay agreements, which you might find help. Why is that? GOBankingRates noted that 49% of Americans were living paycheck to paycheck throughout the year, as well as 22% part of the year in a recent survey.

Sign-Up Bonuses

Banking is a competitive field, and many major institutions will offer incentives to encourage new clients to work with them. Many provide sign-on bonuses when you open a new account that can top $150 to $300 or more. It’s one more point to consider when deciding where to bring your business.

Alternative to Banks

Though banks are a secure way to save and store your money while managing your finances, they are not the only financial institutions that you have as an option. It is always important to do your research to see what banking system works best for you.

Bank vs. Credit Union

There is another option for banking called a credit union. Unlike a traditional national bank, which is a for-profit entity and is governed by shareholders, a credit union is a not-for-profit institution that works for its membership. This means they’re generally smaller and community-based with more personalized services.

There are a few factors in order to be considered eligible for membership in a credit union — usually determined by where you live, an employer you work for or a community you belong to, such as the military. Because credit unions are smaller and not-for-profit, they typically offer better interest rates and lower fees than traditional banks. However, there usually aren’t as many branch locations, and they’re less likely to offer advanced technology, like mobile apps, that national banks offer.

Bank vs. Brokerage

A bank account holds cash deposits, which you can write checks from and use the debit card linked for transactions. Banks also provide services such as loans and lines of credit. Brokerage accounts hold securities, such as stocks, bonds and mutual funds. Some brokerage accounts also hold cash deposits and provide a debit card but generally specialize in investments and portfolio building.

Melanie Grafil, Caitlyn Moorhead, Dawn Alcott, John Csiszar, Nicole Spector, Will Healy and Daria Uhlig contributed to the reporting for this article.

*Capital one interest rates accurate as of Sept. 27, 2024. See website for all current rates.

**SoFi members with Direct Deposit or $5,000 or more in Qualifying Deposits during the 30-Day Evaluation Period can earn annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. Members without either Direct Deposit or Qualifying Deposits, during the 30-Day Evaluation Period will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Only SoFi members with direct deposit are eligible for other SoFi Plus benefits. Interest rates are variable and subject to change at any time. These rates are current as of 10/8/2024. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet.